Gov. Newsom’s Venezuela-Like Price Control Proposal on Oil Industry

Gov. Gavin Newsom’s California Energy Commission regulators announced earlier this month proposed government controls of the petroleum industry, ostensibly in order to combat future energy price surges. This followed Chevron Oil company’s announcement that it will be moving its headquarters to Houston Texas from San Ramon California.

With the California Legislature set to adjourn Friday, Gov. Newsom is threatening to call a special session if lawmakers don’t pass his Venezuela-Like price controls proposal of the oil and gas industry – unless lawmakers pass his latest proposal to control California’s petroleum industry.

Assemblyman Bill Essayli (R-Riverside) took exception to Newsom’s threat:

“Pretty sure this is what we call extortion. How about no on both demands. Go pound sand,” Essayli tweeted.

According to Newsom, who is sounding more like Hugo Chavez:

“The state has found that, when refiners limit gasoline supplies, prices spike at the pump and create massive profits for Big Oil. Today, Governor Gavin Newsom announced a new, first-in-the-nation proposal to further prevent price spikes and save Californians money.

The proposal would authorize the California Energy Commission (CEC) to require that petroleum refiners maintain a minimum fuel reserve to avoid supply shortages that create higher prices for consumers. If this proposal had been in effect in 2023, Californians would’ve saved upwards of $650 million in gas costs due to refiners’ price spikes.”

No mention in Newsom’s proposal of California’s highest-in-the-nation gas taxes…

The Western States Petroleum Association explains how devastating Newsom’s proposal would be:

“There are bad regulations, and then there are regulations so detrimental that industry experts, the California Energy Commission, and anyone with a basic understanding of economics can clearly see the harm they will cause consumers. Governor Newsom’s refinery supply mandate will create artificial shortages of fuel in California, Arizona and Nevada by forcing refiners to withhold fuels from the market. Lawmakers who vote for this mandate will be voting to increase gas costs for their constituents.”

Newsom’s prosed control of the oil and gas industry does the opposite of what he claims.

Appearing desperate for attention after being shoved aside by the DNC, Gov. Newsom had been sort of behaving more like a governor than ever before, seemingly now concerned about the explosion of homeless encampments, even assisting cleanup of camps around the state. But that was merely a head fake – Rumors report that Newsom has been seething after being snubbed and is looking for a get-even event.

Taking over California’s petroleum industry might get Newsom the attention he seeks, as he outlines below:

“What you need to know: Price spikes on consumers are profit spikes for oil companies, and they’re overwhelmingly caused by refiners not backfilling supplies when they go down for maintenance.”

The Western States Petroleum Association vehemently disagrees:

“California already faces a de facto production ban, forcing more than 75 percent of the crude our state uses to be shipped in from overseas. Additionally, upcoming ‘at berth’ regulations, set to take effect in just a few months, may exacerbate this problem by restricting shipping and causing significant declines in the supply of crude oil and other transportation fuel products needed to meet the state’s energy demands. WSPA has repeatedly warned the administration and lawmakers about the cumulative effects of these supply-limiting policies, but to no avail.”

Oil and Gas Fuel Our Comfortable Lifestyle but are Under Attack

California is rich in natural resources which once powered the state and beyond: natural gas deposits in the Monterey Shale formation; geothermal energy, abundant rivers and waterways such as the San Joaquin River Delta and hydroelectric dams; the Pacific coastline; 85 million acres of wildlands with 17 million of those used as commercial timberland; mines and mineral resources, vast farming and agricultural lands, and hunting and fishing.

But California politicians and appointed agency officials, under direction from radical environmental organizations and lobbyists, decided to ignore the energy producing natural resources, and instead are forcing an all-electric grid, and the only approved “renewable energy:” solar and wind energy, or “boutique fuels.”

The push by the governor and environmentalists and the left to rid California and the United States of oil and gas is real, and it is ramping up under the guise of “Climate Change.”

Yet only 1% of Americans say “climate change” is the most important issue in the country – until it comes to government restrictions on energy sources resulting high energy prices.

Gov. Newsom’s answer to California’s highest-in-the-nation gas prices is “price controls” – the worst response he could fixate on.

As the Globe has reported, Oil is the one source of energy that has lifted people out of poverty, and has given us unimaginable products and services, along with the ability to travel.

Driven by technology advancements funded largely by oil companies, air pollution and greenhouse gas emissions have been cut so dramatically that the number of “bad” air quality days in Los Angeles, for example, has dropped by two orders of magnitude.

With the extraction of oil through horizontal drilling and fracking, the U.S. achieved energy independence, and would have become a net exporter of oil and gas by 2025 had the Biden Administration not shut down fracking and the Keystone Pipeline. 

When Donald Trump was President, California produced more than 200 million cubic feet of natural gas in 2017 used for heating and cooking in homes and businesses and to generate electricity.

The Utica Shale, which underlies much of the northeastern part of the U.S. is said to contain the richest deposits of natural gas and crude oil in the country. With the excavations in North Dakota’s Bakken Shale alone, enough gas had been discovered to carry on for generations ahead.

California sits on top of the Monterey Shale Formation, a 1,700 square mile oil-bearing shale formation primarily in the San Joaquin Valley that contains an estimated 15 billion barrels of oil. The Monterey Shale Formation is a resource bigger than Utica Bakken formation, and Texas’ Eagle Ford formation, combined, and is one of the largest known deposits of recoverable oil and gas.

However, the oil and gas industry is one of the highest taxed and heavily regulated  industries.

Gov. Newsom claims that the state’s highest-in-the-nation gas taxes and prices are not what led to dramatically spiking gas/oil prices but because of price gouging by the oil industry. In May, Newsom even signed a gas price gouging law into place.

The California Energy Commission disagreed with the governor at the time, showing that gas price spikes occurred in the last few years because of refineries temporally going out of commission because not enough oil was getting to them. The CEC also said that lower prices this year were caused by many factors, including a cut in industry costs and profits, lower crude oil costs, and in how much environmental programs are getting from the industry, the Globe reported. Prices could even be lower, but as the CEC noted, the only thing that went up was the gas tax itself.

The recent CEC study reported “gasoline remains California’s dominant transportation fuel, and demand is not especially responsive to short-term price spikes.”

Despite that, Newsom’s Venezuela-like proposal would:

1. Obligate California’s petroleum refiners to demonstrate resupply plans and arrangements to the CEC that are adequate to address the loss in production from refinery maintenance.
2. Authorize the CEC to require petroleum refiners to maintain enough fuel inventory to stabilize fuel supply.
3. Impose penalties on refiners who fail to follow these requirements.

The Globe reported in August the CEC proposal of Government control of the petroleum industry:

“The State of California would purchase and own refineries in the State to manage the supply and price of gasoline,” wrote the study’s authors, with the scope of the initiative ranging from “one refinery to all refineries in the state.”

Gov. Newsom uses EU law to justify his proposal:

“The European Union adopted an Oil Stock Directive that requires EU countries to maintain emergency stocks of crude oil and petroleum products equal to at least 90 days of net imports or 61 days of consumption, whichever is higher.”

Petroleum products are everywhere in modern society and include transportation fuels, home and heating oils, oils for electricity generation, asphalt and road oil, and the feedstocks used to make chemicals, plastics, and synthetic materials found in nearly everything we use today.

Here’s a partial list of the vast catalog of products and material goods made possible by oil and gas:

• Clothing, Birkenstock sandals, sneakers, umbrellas, sunglasses, nail polish, foam curlers;
• computers, calculators, telephones, batteries, ball point pens, copy machines, cameras, flashlights;
• motorcycle helmets, life jackets, dog leashes, tires;
• pacifiers, baby bottles, diapers, crayons, car seats, laundry baskets;
• fishing poles, footballs, Frisbees, golf equipment and golf balls, soccer balls, shotgun shells, tents and sleeping bags, guitar strings;
• inhalers, first aid kits, heart valve replacements, hearing aids, prescription bottles;
• red solo cups, coffee pots, Teflon pans, freezer bags and containers, coasters;
• water pipes, smoke detectors, pillows, and even sofas;
• Anything at REI, Anything at Camping World;
• Anything in a Prius – particularly the cushy seats.

Any questions?